CorpBanca Shareholder Vows to Press Case Against Itau Merger

SÃO PAULO–A miniority shareholder in Chilean bank CorpBanca SA on Monday vowed to press its case against a proposed merger with the local unit of Brazil’s Itau Unibanco Holding SA, saying the controlling shareholder and some of the bank’ managers were seeking to “deflect attention.”

“We are writing you again to ensure that statements made by CorpGroup and CorpBanca do not divert your attention from the fundamental issues of value and fairness we have raised concerning the proposed CorpBanca – Itaú transaction,” said Teresa Barger, a senior managing director at asset manager Cartica Capital, in a second letter in a week directed at CorpBanca’s board of directors.

Cartica Capital’s funds together own about 3.2% of CorpBanca’s shares. In a first letter made public last week the investment firm argued that Alvaro Saieh and his holding company, CorpGroup SA, are getting a better deal out of the merger than minority shareholders. Mr. Saieh, through CorpGroup, controls CorpBanca.

In Monday’s letter, Cartica raised a new query about special benefits for Mr. Saieh and his group. A CorpBanca statement to securities regulators includes a clause that states “a right to sell will be granted to CorpGroup as a way out for its interest in the merged bank.”

“If this in fact refers to a valuable put option, why wasn’t this benefit extended to all CorpBanca shareholders?” Ms. Barger asked in the letter.

Other potential benefits Cartica has queried include the nearly $900 million to be paid to minority shareholders of the Colombian operations, which Cartica says is “significantly higher than fair market value.” Additionally, Itau is offering CorpGroup a credit line for $950 million, “which provides no benefit to the bank’s minority shareholders,” according to the letter.

Cartica said that if the board doesn’t respond to its requests “we will act to defend our interests.”

CorpGroup didn’t immediately respond to a request for comment on Monday. The bank said last week in a letter that it “totally rejects” Cartica’s claims, adding that it believes the deal meets all Chilean laws and that when two companies merge, there is no need for a public tender offer for shares outstanding.

CorpGroup said the deal benefits all shareholders equally and said it expects a majority of shareholders to approve the transaction.

In January, Itaú agreed to combine its existing Chilean bank with CorpBanca and invest $650 million in the business. As a result, Itau will own about 33.58% of the new bank and will largely control the operation, while Mr. Saieh will own 32.92%. According to Itau, the new bank would move into fourth place in Chile by assets.